Israel’s ideological debates on the existential issues of war and peace are fuelled by non-governmental organizations on all sides. In these intense NGO battles, hundreds of millions in foreign money, including tax-exempt contributions from the United States, as well as more secretive and targeted European government funding, plays a central role.

This background is necessary in understanding the context, but is often missing in media reports. Exposés of tax-exempt funding for organizations that promote settlements, such as in the New York Times (“Tax-Exempt Funds Aid Settlements in West Bank,” July 6), while factually accurate, are highly misleading. The authors erased at least half the story.

Indeed, Zionist and Israeli politics, from the pre-state factions to Ben Gurion and Begin, has always been dependent on foreign funding. Donations come from a wide range of donors, whose politics reflect the full spectrum of Israel’s intense democracy. Left and right, religious and secular, Jewish and Arab — each group has backers, particularly in the U.S.

This process is facilitated by American tax laws, which are content-neutral. Just as most religious organizations are able to receive funds and provide tax deductions, despite the separation of church and state, so too are a vast range of other causes, including those related to Israel.

Based on NGO Monitor’s research, the scale of tax-exempt funding from the U.S. for the left side of the political and ideological spectrum appears comparable to the funds distributed to pro-settlement groups ($20 million to $25 million annually). And, as in the hard-core right-wing groups highlighted by the Times, radical left grantees promote some objectives that are in direct opposition to U.S. government policies, including support for terrorism.

International Solidarity Movement members regularly violate Israeli law through violent “direct actions,” including participation in the recent Free Gaza Flotilla. ISM receives funding via directed donations to the AJ Muste Memorial Institute and the Middle East Children’s Alliance, both of which have tax-exempt status.

Press stories on U.S. tax exemption for groups that support settlements are central in the Israeli ideological battles.

In July 2009, a radical left group known as Gush Shalom circulated a confidential memo telling supporters that it “has been engaged recently in the planning, funding and implementation of a legal and public advocacy campaign aimed at blocking foreign funding of illegal settlement activity.”

The stakes for Israel are very high, and NGOs are seen as leading the campaign to isolate Israel, using allegations of war crimes, as reflected in the Goldstone UN report on Gaza. Groups on the radical left have led this campaign, using foreign donations, including those from European governments and tax-exempt foundations in the U.S. More than half of the claims and references in Goldstone’s indictment are attributed to 48 of these NGOs.

Mega-philanthropies are major supporters of these groups, giving them resources and high political visibility. George Soros’ Open Society Institute, the New Israel Fund ($31 million annual budget) and the Ford Foundation are central to this effort. OSI and Ford are also major donors to groups like Human Rights Watch, which has a $40 million annual budget and a Middle East division that works to “turn Israel into a pariah state,” to quote HRW founder Robert Bernstein’s op-ed in The Times.

In Israel, the consequences of this demonization and “third-generation warfare” (after conventional and terror attacks) led to a greater awareness of the power of NGOs to damage Israeli vital interests. Prominent journalists and members of the Israeli Knesset have criticized the role of foreign funding for such political warfare. They also discovered that European governments provide additional funds, amounting to tens of millions of dollars annually, without transparency, to many of the same organizations. Legislation was then introduced to provide such transparency on the Israeli end, and the radical left feared that they would lose funding and impact.

These issues have become central to Israeli political debate, and clearly contributed to the “advocacy campaign aimed at blocking foreign funding” for the right.

Gerald M. Steinberg is a professor at Bar Ilan University and heads the NGO Monitor.

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